Insurance & Employee Benefits
The Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides for payments of the unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only the employer pays FUTA tax; it is not withheld from the employee’s wages.
The Department of Labor provides information and links on what unemployment insurance is, how it is funded, and how employees are eligible for it.
In general, the Federal-
U.S. Department of Labor -
The Department of Labor's Unemployment Insurance (UI) programs provide unemployment benefits to eligible workers who become unemployed through no fault of their own, and meet certain other eligibility requirements.
Choose from the following Web pages to find information about who is eligible for these benefits and how to file a claim.
DOL Web Pages on This Topic
State Unemployment Insurance
Disaster Unemployment Assistance (DUA)
Disaster Unemployment Assistance provides financial assistance to individuals whose employment or self-
Unemployment Compensation for Federal Employees
The Unemployment Compensation for Federal Employees program provides benefits for eligible unemployed former civilian federal employees.
Unemployment Compensation for Ex-
The Unemployment Compensation for Ex-
Extended Benefits are available to workers who have exhausted regular unemployment insurance benefits during periods of high unemployment.
Trade Readjustment Allowances (TRA)
Trade Readjustment Allowances are income support to persons who have exhausted Unemployment Compensation and whose jobs were affected by foreign imports.
CareerOneStop.org provides electronic tools to assist workers with finding a job, utilizing available training opportunities or conducting career planning. There is no cost to businesses or workers who use this service.
The Department of Labor's toll-
Additional information on topics relevant to the unemployed can be found on the Department of Labor's Web interface, Find It! By Audience — Job Seekers/Unemployed.
Unemployment Insurance Tax Topic Source: www.dol.gov
Unemployment Insurance Taxes
Unemployment Insurance (UI) is a federal-
Federal Unemployment Tax Act
The Federal Unemployment Tax Act (FUTA), authorizes the Internal Revenue Service(IRS) to collect a Federal employer tax used to fund state workforce agencies. Employers pay this tax annually by filing IRS Form 940. FUTA covers the costs of administering the UI and Job Service programs in all states. In addition, FUTA pays one-
Federal Tax Rate
FUTA taxes are calculated by multiplying 6.0% times the employer's taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay their state unemployment taxes on a timely basis receive an offset credit of up to 5.4% regardless of the rate of tax paid to the state. The FUTA tax rate for employers in states not subject to a FUTA credit reduction is generally 0.6% (6.0% -
State Unemployment Tax
State law determines individual state unemployment insurance tax rates. For a table of current tax rates and taxable wage base information for individual states, click here http://www.unemploymentinsurance.doleta.gov/unemploy/statelaws.asp and select Significant Provisions of State UI Laws.
The state unemployment tax, paid to state workforce agencies, is used solely for the payment of benefits to eligible unemployed workers.
Worker misclassification occurs when an employer incorrectly classifies a worker as a non-
The rules that determine classification for employment at the Federal level follow common law. For IRS, the facts that provide evidence of the degree of control and independence fall into three categories:
These factors are evaluated on IRS Form SS-
Domestic Employers Coverage
Employers of domestic employees must pay state and Federal unemployment taxes if they pay cash wages to household workers totaling $1,000, or more, in any calendar quarter of the current or preceding year. A household worker is an employee who performs domestic services in a private home. Examples of household employees are: babysitters, caretakers, cleaning people, drivers, nannies, health aides, yard workers and private nurses.
Employers of Agricultural Employees
Employers must pay Federal unemployment taxes if: (1) they pay wages to employees of $20,000, or more, in any calendar quarter; or, (2) in each of 20 different calendar weeks in the current or preceding calendar year, there was at least 1 day in which they had 10 or more employees performing service in agricultural labor. The 20 weeks do not have to be consecutive weeks, nor must they be the same 10 employees, nor must all employees be working at the same time of the day.
Generally, agricultural employers are also subject to state unemployment taxes, and employers should contact their state workforce agencies to learn the exact requirements.
Created: March 29, 2004
Updated: July 10, 2015